UK FPC assessment of bank capital requirements

The Bank of England's (BoE) Financial Policy Committee (FPC) has published a Financial Stability in Focus report, revisiting its assessment of bank capital requirements. The FPC now judges that the appropriate benchmark for the system-wide level of Tier 1 capital requirements is around 13% of risk-weighted assets, equivalent to a Common Equity Tier 1 (CET1) ratio of around 11%. This represents a reduction from the 2019 assessment, which set the benchmark at 14%, reflecting improvements in risk measurement, a lower systemic importance of some banks, and a decline in banks' average risk weights.

The FPC also proposes priority areas within the capital framework for review, to make it more effective. This includes:

• Enhancing the usability of capital buffers.
• Assessing the leverage ratio framework.
• Reviewing interactions of capital requirements that apply to domestic exposures.
• Developing a systematic approach for updating regulatory thresholds.
• Supporting the UK Prudential Regulation Authority's (PRA) contribution to the government's review of the ring-fencing regime.
• Supporting the PRA's work on risk weight modelling for mortgage lending.

The deadline for feedback is 2 April 2026, with structured evidence gathering sessions expected in early 2026. Further updates on the evidence gathered is expected in the next Financial Stability report. In parallel, the FPC published its December Financial Stability Report and meeting record. In the record, the FPC cites key sources of risk including geopolitical tensions, fragmentation of trade and financial markets, and pressures on sovereign debt markets. That said, in reporting on the results of the 2025 Bank Capital Stress Test, it concludes that the UK banking system is able to continue to support growth even if economic and financial conditions turned out to be materially worse than expected. The FPC has maintained the UK countercyclical capital buffer rate at 2%.

Return to main website.